Business

Markets enjoying a happy new year

Positive manufacturing data from China and a continued weakening of US dollar boost Singapore stocks

You name it, the market's got it. Singapore stocks got off to a flying start in 2018, aided by positive manufacturing data from China and a continued weakening of the US dollar.

The benchmark Straits Times Index (STI) added 27.38 points to close at 3,430.30. About 1.49 billion shares worth $924.5 million changed hands.

The STI is now just one major rally away from surpassing last year's intraday high of 3,469.36 points. Beyond that, the next target is 3,549.85 points, the post financial crisis high achieved in 2015.

Yesterday, there was an impressive number of 334 gainers versus 125 losers.

The biggest percentage gainers among the most active stocks by value traded were Cosco Shipping (+8 per cent), Venture (+4.6 per cent), SPH (+4.2 per cent) and Yangzijiang Shipbuilding (2.7 per cent).

Even land transport firm ComfortDelGro found itself back above $2 after spending much of December below it.

For a spell, Brent crude traded over US$67 a barrel, staying well above the psychologically important US$60 mark. Higher oil prices lifted explorers, as well as rig builders like Keppel Corporation.

Higher oil was also positive for crude palm oil, which continued to rebound off a December low. Palm oil-linked stocks like Wilmar International and Golden Agri-Resources rose.

Nevertheless, analysts expect lower prices this year due to higher supply.

Real estate investment trusts (Reits) continued their magnificent run despite the threat of higher interest rates this year. Office landlord CapitaLand Commercial Trust notably added 2.6 per cent to $1.98, a new 10-year high.

Cheery new vibes continue to be passed around.

In the region, China stocks listed in Hong Kong rallied after the Caixin/Markit December purchasing managers' index (PMI), which focuses on small and medium sized firms, beat expectations.

The Hang Seng Index surged well past the 30,000-point mark.

HSBC said in its Q1 2018 outlook report that the world is entering the new year at a "decent enough cruising speed".

Higher US interest rates can prompt regional central banks to tighten monetary policy as well.

But HSBC thinks Asian banks will not tighten as fast as the Fed as inflation is still low and current account positions are strong.

A more worrying risk seems to be construction activity in China slowing down due to more regulations and an emphasis on environmental protection.

This might cause the economy to slow down faster than expected. Financial conditions in China have also tightened in recent months.

Meanwhile, the ongoing electronics boom is expected to benefit countries near China like Japan, South Korea, and Taiwan.

Firms there, and to a lesser extent in Singapore, specialise more in advanced semiconductors and other high-tech products.

In Singapore, precision engineering firm UMS, which makes components for semiconductor manufacturing equipment maker Applied Materials, gained 5.9 per cent to $1.08.

Global sales of semiconductors are expected by the industry to rise this year but at a slower pace compared with the records set last year.

DBS economist Irvin Seah said in a Singapore report yesterday that manufacturing sector growth could ease amid a lack of new smartphone product launches.

Nobody is listening to words of caution though. It is, for now, a happy new year.

For full listings of SGX prices, go to http://btd.sg/BTmkts